The hike in export duty on iron ore from 5 per cent to 20 per cent will reduce Goan exports substantially, resulting in a corresponding reduction in royalty earnings to the state, the Goa Mineral Ore Exporters' Association said on Monday.

"Goa's low-grade ore has no use in the domestic market and raising its duty in line with high-grade ore may make it economically unviable to export," GMOEA executive director S Sridhar said.

Warning that the ripple effect will be that employment to mining trucks and barges will be affected and importers will lose confidence in Goan exporters' reliability and may even shun them, he said the association will move the state and central governments to reconsider the hike.

Sridhar explained that buyers will not pay a higher price for ore whose price is otherwise low, just because the Indian government has raised its export duty. "Mining companies may reduce exports which in turn will reduce the state's royalty earnings."

GMOEA's Glen Kalavampara said Salgaoncar Mining is considering reducing exports from 4 million tonnes to about 1 million tonnes. "If mining companies reduce their exports by 75 per cent, the state government's royalty will suffer," he said.

"Mining is pumping so much revenue into the state's coffers. We are being penalised for no fault of ours. The government's intentions might have been to put curbs on exports of items which are used in domestic processing. But low-grade ore has no use domestically and can only be exported. Also, the demand for it is never uniform. We might even lose importers who may feel we are unreliable suppliers," Kalavampara added.